Correlation Between LG Electronics and Dongil Steel
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Dongil Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LG Electronics and Dongil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics Pfd and Dongil Steel Co, you can compare the effects of market volatilities on LG Electronics and Dongil Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LG Electronics with a short position of Dongil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Dongil Steel.
Diversification Opportunities for LG Electronics and Dongil Steel
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 066575 and Dongil is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics Pfd and Dongil Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Steel and LG Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LG Electronics Pfd are associated (or correlated) with Dongil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Steel has no effect on the direction of LG Electronics i.e., LG Electronics and Dongil Steel go up and down completely randomly.
Pair Corralation between LG Electronics and Dongil Steel
Assuming the 90 days trading horizon LG Electronics Pfd is expected to generate 1.22 times more return on investment than Dongil Steel. However, LG Electronics is 1.22 times more volatile than Dongil Steel Co. It trades about -0.09 of its potential returns per unit of risk. Dongil Steel Co is currently generating about -0.25 per unit of risk. If you would invest 4,700,000 in LG Electronics Pfd on August 29, 2024 and sell it today you would lose (150,000) from holding LG Electronics Pfd or give up 3.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics Pfd vs. Dongil Steel Co
Performance |
| Timeline |
| LG Electronics Pfd |
| Dongil Steel |
LG Electronics and Dongil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Dongil Steel
The main advantage of trading using opposite LG Electronics and Dongil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Dongil Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dongil Steel will offset losses from the drop in Dongil Steel's long position.| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
| Dongil Steel vs. Keum Kang Steel | Dongil Steel vs. Tplex Co | Dongil Steel vs. Samhyun Steel Co | Dongil Steel vs. Wonil Special Steel |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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